Breach of trust has always been a critical concern for players when it comes to online poker operators. The first ever breach dates to as far back as 2001 when PokerSpot, one of the pioneering online poker sites shut down abruptly taking $400,000 worth of player deposits with it. However, the true wakeup call came in 2011 when customers of Full Tilt Poker learned that $360 million in player funds had disappeared. This was shortly after the United States Department of Justice decided to shut down all the major poker sites in the country on April 15, 2011.
In essence, online poker sites can be considered to be banks of some sorts with players depositing money in the belief that their funds are safe. The players trust the online poker sites to process withdrawals and send their funds if they win. Since players cannot rely on government-backed failsafe systems such as the Federal Deposit Insurance Corporation, they have no option but to act on faith and in retrospective, they have more than enough incentives to question that faith.
The Blockchain Revolution
Blockchain technology has proven time and time again that it is here to stay and this is not just because they are the backbone of decentralized digital currencies but also because it has the potential for a wide array of applications across different fields. The basic concept of how a blockchain operates is quite easy to comprehend – it is basically a ledger of transactions. What makes this so special is the fact that is made public with multiple copies, that is, transactions in a blockchain do not involve a centralized third party. Now that we know what it is, how does it help the online poker industry?
Well, the idea of using blockchain on online poker sites involves the utilization of smart contracts instead of depositing money on an online poker site. This way, the players keep control of their own wallets. Smart contracts essentially hold your funds in escrow instead of having your money deposited to a server on any third party – funds move directly between players in a peer-to-peer network.
As such, if you lose in a poker game, the smart contract will distribute your money to the winners, but if you win the smart contract moves the winnings into your wallet. In addition to this, smart contracts have the same properties as other blockchain transactions which means that they are audited by every member of the network. Now, that is something that is worth having faith in.
Already, a number of online poker sites are using blockchain technology to power their operations it has paid off quite well so far as players are interested in finding something that assures the safety of their funds. A great example is Virtue Poker, a poker operator that was born from the blockchain production studio ConsenSys. Virtue Poker is a blockchain-based online poker platform built on Ethereum and it utilizes smart contracts.